Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended April 30, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File No. 001-33866 TITAN MACHINERY INC. (Exact name of registrant as specified in its charter) (State or Other Jurisdiction of Incorporation or Organization) Delaware 45-035 ...

Part I [Business](index=3&type=section&id=Item%201.%20Business) Titan Machinery operates full-service agricultural and construction equipment dealerships in the U.S. and Europe - The company is the **largest retail dealer of Case IH Agriculture equipment globally** and the **largest retail dealer of Case Construction equipment in North America**[11](index=11&type=chunk) - Operates through three segments: Agriculture, Construction, and International, with a network of **74 stores in the U.S.** and **33 in Europe**[12](index=12&type=chunk)[13](index=13&type=chunk) Revenue Contribution by Activity (Fiscal Years 2018-2020) | Revenue Source | FY 2020 | FY 2019 | FY 2018 | | :--- | :--- | :--- | :--- | | Equipment | 70.3% | 72.1% | 70.8% | | Parts | 17.9% | 16.7% | 17.0% | | Service | 7.6% | 6.9% | 7.4% | | Rental & Other | 4.2% | 4.3% | 4.7% | - Growth strategy focuses on increasing same-store sales and pursuing strategic acquisitions, having completed **over 50 dealership acquisitions** since January 2003[38](index=38&type=chunk)[39](index=39&type=chunk) [Risk Factors](index=18&type=section&id=Item%201A.%20Risk%20Factors) The company faces risks from CNH Industrial dependence, market cyclicality, international operations, and ERP system issues - Substantial dependence on CNH Industrial, which supplied approximately **74% of new Agriculture equipment**, **70% of new Construction equipment**, and **62% of new International equipment** in fiscal 2020[80](index=80&type=chunk) - Agricultural and construction equipment sales are cyclical and affected by external factors like **net farm income**, **commodity prices**, **trade policies**, and **public infrastructure spending**[89](index=89&type=chunk)[90](index=90&type=chunk) - The **COVID-19 pandemic** is identified as a significant risk that could disrupt supply chains, decrease customer demand, and adversely impact business operations and financial condition[93](index=93&type=chunk) - International operations, which accounted for **18.1% of fiscal 2020 revenue**, expose the company to risks including **currency fluctuations**, **political instability** (particularly in Ukraine), and different legal/regulatory environments[101](index=101&type=chunk)[104](index=104&type=chunk) - The company is implementing a new **Enterprise Resource Planning (ERP) system**, and potential problems with its design or implementation could interfere with business operations and financial reporting[116](index=116&type=chunk) [Unresolved Staff Comments](index=26&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - **None**[135](index=135&type=chunk) [Properties](index=26&type=section&id=Item%202.%20Properties) As of January 31, 2020, the company operates 107 equipment stores across the U.S. and Europe, mostly leased Store Count by Segment and Location (as of Jan 31, 2020) | Location | Agriculture | Construction | International | Total | | :--- | :--- | :--- | :--- | :--- | | **US States** | | | | | | North Dakota | 10 | 5 | — | 15 | | Minnesota | 10 | 3 | — | 13 | | Iowa | 10 | 3 | — | 13 | | Nebraska | 11 | 2 | — | 13 | | South Dakota | 8 | 2 | — | 10 | | Other US | — | 9 | — | 9 | | **European Countries** | | | | | | Romania | — | — | 12 | 12 | | Ukraine | — | — | 8 | 8 | | Bulgaria | — | — | 7 | 7 | | Germany | — | — | 5 | 5 | | Serbia | — | — | 1 | 1 | | **Total** | **49** | **25** | **33** | **107** | - The company leases **94 store facilities** and owns **13 store facilities** (9 in the U.S. and 4 in Germany)[138](index=138&type=chunk)[140](index=140&type=chunk) [Legal Proceedings](index=27&type=section&id=Item%203.%20Legal%20Proceedings) The company is subject to routine legal claims, with no material financial impact expected from their resolution - The company is subject to routine claims and suits, but management believes their resolution will **not have a material financial impact**[142](index=142&type=chunk) [Mine Safety Disclosures](index=27&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - **Not applicable**[143](index=143&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=28&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) TITN common stock trades on NASDAQ, has not paid dividends, and underperformed key indices over five years - Common stock is listed on the **NASDAQ Stock Market** under the symbol **"TITN"**[149](index=149&type=chunk) - The company has **not paid dividends** and does not anticipate paying them in the foreseeable future, prioritizing expansion and managing debt[150](index=150&type=chunk) Stock Performance Comparison (Value of $100 Investment) | Date (Jan 31) | Titan Machinery Inc. | Russell 2000 Index | S&P 500 Retail Index | | :--- | :--- | :--- | :--- | | 2015 | $100.00 | $100.00 | $100.00 | | 2016 | $60.08 | $88.84 | $115.56 | | 2017 | $97.74 | $116.86 | $135.00 | | 2018 | $152.09 | $135.15 | $194.19 | | 2019 | $132.63 | $129.01 | $203.54 | | 2020 | $86.41 | $138.71 | $243.26 | [Selected Financial Data](index=30&type=section&id=Item%206.%20Selected%20Financial%20Data) Selected financial data shows fiscal 2020 revenue of $1.31 billion and net income of $14.0 million Selected Statement of Operations Data (in thousands, except per share data) | Fiscal Year Ended Jan 31 | 2020 | 2019 | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $1,305,171 | $1,261,505 | $1,192,606 | $1,201,697 | $1,355,792 | | Income (Loss) from Operations | $21,332 | $27,481 | $925 | $(2,372) | $(23,110) | | Net Income (Loss) | $13,953 | $12,182 | $(7,049) | $(14,179) | $(37,892) | | Diluted EPS | $0.63 | $0.55 | $(0.32) | $(0.65) | $(1.76) | Selected Balance Sheet Data (in thousands) | As of Jan 31 | 2020 | 2019 | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | :--- | :--- | | Total Assets | $975,343 | $792,438 | $760,308 | $771,422 | $1,047,875 | | Floorplan payable | $371,772 | $273,756 | $247,392 | $233,228 | $444,780 | | Total stockholders' equity | $345,104 | $335,311 | $321,855 | $321,179 | $338,349 | - The number of stores at fiscal year-end was **107 in 2020**, 104 in 2019, 97 in 2018, 109 in 2017, and 108 in 2016[158](index=158&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses fiscal 2020 performance, noting revenue growth, improved gross margin, increased expenses, and liquidity [Results of Operations (FY2020 vs. FY2019)](index=43&type=section&id=Results%20of%20Operations) Fiscal 2020 revenue increased to $1.31 billion, driven by parts and service, with improved gross margin Revenue by Source (FY2020 vs. FY2019) | Revenue Source | FY 2020 (in thousands) | FY 2019 (in thousands) | % Change | | :--- | :--- | :--- | :--- | | Equipment | $917,202 | $909,178 | 0.9% | | Parts | $234,217 | $210,796 | 11.1% | | Service | $99,165 | $86,840 | 14.2% | | Rental and other | $54,587 | $54,691 | (0.2)% | | **Total Revenue** | **$1,305,171** | **$1,261,505** | **3.5%** | Gross Profit and Margin by Source (FY2020 vs. FY2019) | Source | Gross Profit FY20 (k) | Gross Margin FY20 | Gross Profit FY19 (k) | Gross Margin FY19 | | :--- | :--- | :--- | :--- | :--- | | Equipment | $98,495 | 10.7% | $96,711 | 10.6% | | Parts | $69,027 | 29.5% | $61,181 | 29.0% | | Service | $65,719 | 66.3% | $57,804 | 66.6% | | Rental and other | $17,577 | 32.2% | $15,892 | 29.1% | | **Total** | **$250,818** | **19.2%** | **$231,588** | **18.4%** | - Operating expenses increased by **$24.2 million (12.0%)** in fiscal 2020, primarily due to **ERP transition costs**, acquisitions, and costs to support higher business volumes[217](index=217&type=chunk) Segment Income (Loss) Before Income Taxes (FY2020 vs. FY2019) | Segment | FY 2020 (in thousands) | FY 2019 (in thousands) | % Change | | :--- | :--- | :--- | :--- | | Agriculture | $18,036 | $16,799 | 7.4% | | Construction | $(2,290) | $(4,400) | 48.0% | | International | $504 | $5,160 | (90.2)% | | **Total Segment Income** | **$16,250** | **$17,559** | **(7.5)%** | [Non-GAAP Financial Measures](index=49&type=section&id=Non-GAAP%20Financial%20Measures) The company provides non-GAAP measures like Adjusted Net Income and EBITDA, showing improved fiscal 2020 performance Reconciliation of Net Income to Adjusted Net Income and Adjusted EBITDA (in thousands) | Measure | FY 2020 | FY 2019 | | :--- | :--- | :--- | | Net Income (GAAP) | $13,953 | $12,182 | | Adjustments (pre-tax) | $10,939 | $3,185 | | Tax Effect & Valuation Allowance | $(7,182) | $(636) | | **Adjusted Net Income (Non-GAAP)** | **$17,710** | **$14,731** | | | | | | EBITDA (Non-GAAP) | $46,840 | $46,577 | | Adjustments | $6,261 | $3,185 | | **Adjusted EBITDA (Non-GAAP)** | **$53,101** | **$49,762** | Reconciliation of Diluted EPS to Adjusted Diluted EPS | Measure | FY 2020 | FY 2019 | | :--- | :--- | :--- | | Diluted EPS (GAAP) | $0.63 | $0.55 | | Total Adjustments | $0.16 | $0.12 | | **Adjusted Diluted EPS (Non-GAAP)** | **$0.79** | **$0.67** | [Liquidity and Capital Resources](index=52&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity relies on operations and credit facilities, with $717.0 million in floorplan lines and a new credit agreement - As of Jan 31, 2020, the company had floorplan payable lines of credit totaling **$717.0 million**, including a **$450.0 million facility with CNH Industrial Capital** and a **$140.0 million line under the Wells Fargo Credit Agreement**[238](index=238&type=chunk) - The remaining outstanding Senior Convertible Notes (**$45.6 million principal**) were repaid on their maturity date of May 1, 2019[241](index=241&type=chunk)[243](index=243&type=chunk) - Subsequent to fiscal year-end, on April 3, 2020, the company entered into a new five-year, **$250 million credit facility**, enhancing liquidity and extending debt maturity[239](index=239&type=chunk)[528](index=528&type=chunk) - Projected capital expenditures for fiscal 2021 are approximately **$20.0 million for property and equipment** and **$15.0 million for the rental fleet**[247](index=247&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=60&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks from interest rate fluctuations and foreign currency exposure, particularly UAH - A **one percentage point increase in interest rates** would decrease pre-tax earnings and cash flow by approximately **$1.8 million** over a 12-month period[270](index=270&type=chunk) - The company is exposed to foreign currency risk from its international operations, with transactional and translational risks. It holds **$3.8 million of net monetary assets denominated in Ukrainian hryvnia (UAH)** as of Jan 31, 2020[271](index=271&type=chunk) [Financial Statements and Supplementary Data](index=61&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's audited consolidated financial statements for fiscal years 2018-2020 [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=126&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes or disagreements with its accountants on accounting or financial disclosure - **None**[532](index=532&type=chunk) [Controls and Procedures](index=126&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management and auditors concluded that disclosure controls and internal control over financial reporting were effective - The CEO and CFO concluded that the company's **disclosure controls and procedures were effective** as of January 31, 2020[533](index=533&type=chunk) - Management concluded that **internal control over financial reporting was effective** as of January 31, 2020, a conclusion audited and affirmed by Deloitte & Touche LLP[534](index=534&type=chunk)[535](index=535&type=chunk) [Other Information](index=126&type=section&id=Item%209B.%20Other%20Information) The company reports no other information for this item - **None**[537](index=537&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=126&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the proxy statement - Information required by this item is incorporated by reference from the company's **2020 proxy statement**[539](index=539&type=chunk) [Executive Compensation](index=126&type=section&id=Item%2011.%20Executive%20Compensation) Information on executive compensation is incorporated by reference from the company's 2020 proxy statement - Information required by this item is incorporated by reference from the company's **2020 proxy statement**[540](index=540&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=126&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information on security ownership and equity compensation plans is incorporated by reference from the proxy statement - Information required by this item is incorporated by reference from the company's **2020 proxy statement**[541](index=541&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=127&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on related party transactions and director independence is incorporated by reference from the proxy statement - Information required by this item is incorporated by reference from the company's **2020 proxy statement**[542](index=542&type=chunk) [Principal Accounting Fees and Services](index=127&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information on principal accounting fees and services is incorporated by reference from the company's 2020 proxy statement - Information required by this item is incorporated by reference from the company's **2020 proxy statement**[543](index=543&type=chunk) Part IV [Exhibits, Financial Statement Schedules](index=127&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists all financial statements, schedules, and exhibits filed as part of the Form 10-K - Lists all financial statements, schedules, and exhibits filed with the Form 10-K[545](index=545&type=chunk)[546](index=546&type=chunk) - Key exhibits include **dealer and financing agreements with CNH Industrial**, the **Third Amended and Restated Credit Agreement**, and **executive employment agreements**[548](index=548&type=chunk)[550](index=550&type=chunk)[552](index=552&type=chunk) [Form 10-K Summary](index=134&type=section&id=Item%2016.%20Form%2010-K%20Summary) This item is not applicable to the company - **Not applicable**[555](index=555&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended October 31, 2019 Commission File No. 001-33866 TITAN MACHINERY INC. (Exact name of registrant as specified in its charter) (State or Other Jurisdiction of Incorporation or Organization) Delaware No. 45-0357838 (IRS Employer Identification No.) 644 East Beaton Drive West Fargo, ND 58078-2648 (Ad ...

[Table of Contents](index=2&type=section&id=Table%20of%20Contents) [PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Financial Statements](index=3&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) Unaudited Q2 2019 financial statements reflect total assets of $1.03 billion, increased revenue to $315.0 million, and net income of $5.5 million, influenced by inventory growth and ASC 842 adoption [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) As of July 31, 2019, total assets increased to $1.03 billion, primarily due to higher inventories and new operating lease assets from ASC 842 adoption, alongside a rise in total liabilities Consolidated Balance Sheet Highlights (in thousands) | Account | July 31, 2019 | January 31, 2019 | Change | | :--- | :--- | :--- | :--- | | **Total Assets** | **$1,029,196** | **$792,438** | **+$236,758** | | Inventories | $629,246 | $491,091 | +$138,155 | | Operating lease assets | $95,432 | $— | +$95,432 | | **Total Liabilities** | **$693,237** | **$457,127** | **+$236,110** | | Floorplan payable | $451,934 | $273,756 | +$178,178 | | Operating lease liabilities (Current & Long-Term) | $105,432 | $— | +$105,432 | | Senior convertible notes | $— | $45,249 | -$45,249 | | **Total stockholders' equity** | **$335,959** | **$335,311** | **+$648** | [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) For Q2 2019, total revenue increased 6.0% to $315.0 million, with gross profit and net income also rising, reflecting strong sales across segments Statement of Operations Summary (in thousands, except per share data) | Metric | Q2 2019 | Q2 2018 | YoY Change | Six Months 2019 | Six Months 2018 | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $314,981 | $297,231 | +6.0% | $593,271 | $540,946 | +9.7% | | Gross Profit | $64,027 | $58,901 | +8.7% | $117,926 | $106,459 | +10.8% | | Income from Operations | $9,172 | $10,547 | -13.0% | $10,381 | $11,378 | -8.8% | | Net Income | $5,511 | $5,180 | +6.4% | $5,066 | $3,566 | +42.1% | | Diluted EPS | $0.25 | $0.23 | +8.7% | $0.23 | $0.16 | +43.8% | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended July 31, 2019, net cash used in operations improved to $6.3 million, primarily due to inventory increases, while financing activities provided cash offsetting investing uses Cash Flow Summary for Six Months Ended July 31 (in thousands) | Activity | 2019 | 2018 | | :--- | :--- | :--- | | Net Cash Used for Operating Activities | $(6,303) | $(14,087) | | Net Cash Used for Investing Activities | $(14,638) | $(5,309) | | Net Cash Provided by Financing Activities | $13,647 | $15,717 | | **Net Change in Cash** | **$(7,228)** | **$(3,723)** | [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Key notes detail ASC 842 adoption, segment revenue, a German acquisition, an antitrust investigation contingency, and a corrected immaterial prior period error - The company adopted the new lease accounting standard ASC 842 on February 1, 2019, resulting in the recognition of **$100.5 million** in operating lease assets and **$98.3 million** in operating lease liabilities on the balance sheet[22](index=22&type=chunk)[24](index=24&type=chunk)[25](index=25&type=chunk) - On January 1, 2019, the Company acquired German agriculture equipment dealership ESB Agrartechnik GmbH for **$3.0 million** in cash, resulting in **$0.5 million** of goodwill[68](index=68&type=chunk) - The company is under investigation by the Romania Competition Council (RCC) regarding potential anti-competitive practices, but the outcome or potential loss cannot be estimated[72](index=72&type=chunk) - An immaterial error in prior period financial statements related to the elimination of internal parts and service transactions was identified and corrected, with no impact on gross profit, net income, or EPS for the three and six months ended July 31, 2018[77](index=77&type=chunk)[78](index=78&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses Q2 fiscal 2020 revenue growth, margin improvements offset by rising operating expenses, decreased interest costs, and sufficient liquidity for the next 12 months [Results of Operations](index=30&type=section&id=Results%20of%20Operations) Q2 revenue grew 6.0% driven by Agriculture and Construction, with improved gross margin offset by a 15.2% increase in operating expenses, impacting operating income Revenue by Segment - Q2 Comparison (in thousands) | Segment | Q2 2019 Revenue | Q2 2018 Revenue | % Change | | :--- | :--- | :--- | :--- | | Agriculture | $165,692 | $151,877 | +9.1% | | Construction | $84,039 | $77,521 | +8.4% | | International | $65,250 | $67,833 | -3.8% | | **Total** | **$314,981** | **$297,231** | **+6.0%** | Income Before Taxes by Segment - Q2 Comparison (in thousands) | Segment | Q2 2019 Income | Q2 2018 Income | % Change | | :--- | :--- | :--- | :--- | | Agriculture | $6,177 | $4,960 | +24.5% | | Construction | $1,334 | $(30) | n/m | | International | $505 | $3,726 | -86.4% | | **Total Segment Income** | **$8,016** | **$8,656** | **-7.4%** | - Operating expenses increased by **$7.2 million** (**15.2%**) in Q2 2020 compared to Q2 2019, primarily due to the AGRAM acquisition, ERP transition costs, and higher costs to support increased business volumes[97](index=97&type=chunk) - Floorplan and other interest expenses decreased by a combined **43.9%** in Q2 2020, mainly due to lower levels of interest-bearing inventory and the full repayment of senior convertible notes in May 2019[83](index=83&type=chunk)[99](index=99&type=chunk) [Non-GAAP Financial Measures](index=41&type=section&id=Non-GAAP%20Financial%20Measures) The company presents non-GAAP adjusted net income and diluted EPS, excluding specific one-time costs, to provide a clearer view of core business performance Reconciliation of GAAP to Non-GAAP Diluted EPS | | Three Months Ended July 31, | Six Months Ended July 31, | | :--- | :--- | :--- | | | **2019** | **2018** | **2019** | **2018** | | Diluted EPS (GAAP) | $0.25 | $0.23 | $0.23 | $0.16 | | ERP transition costs | $0.08 | $— | $0.13 | $— | | Loss on repurchase of senior convertible notes | $— | $0.03 | $— | $0.03 | | Restructuring and impairment charges | $— | $0.03 | $— | $0.03 | | Tax Effect of Adjustments | $(0.02) | $(0.01) | $(0.03) | $(0.01) | | **Adjusted Diluted EPS (Non-GAAP)** | **$0.31** | **$0.28** | **$0.33** | **$0.21** | [Liquidity and Capital Resources](index=43&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity is supported by cash, operating cash flow, and $640.0 million in credit facilities, with senior convertible notes fully repaid, ensuring adequate resources for the next 12 months - Primary sources of liquidity are cash reserves, cash from operations, and borrowings under floorplan and other credit facilities[132](index=132&type=chunk) - As of July 31, 2019, the company had floorplan payable lines of credit totaling **$640.0 million**[133](index=133&type=chunk) - The company's senior convertible notes matured and the outstanding principal balance of **$45.6 million** was repaid in full on May 1, 2019, using available cash and borrowing capacity[136](index=136&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=47&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company faces market risks from interest rate fluctuations and foreign currency exposure, particularly the Ukrainian hryvnia, which are managed through various strategies - A one percentage point increase in interest rates would decrease pre-tax earnings and cash flow by approximately **$1.8 million** over a 12-month period[155](index=155&type=chunk) - The company is exposed to foreign currency risk, particularly from its Ukrainian subsidiary's net monetary assets denominated in Ukrainian hryvnia (UAH), which could be impacted by political or economic instability[156](index=156&type=chunk) [Controls and Procedures](index=47&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - Management concluded that the Company's disclosure controls and procedures were effective as of the end of the period covered by the report[158](index=158&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal controls[159](index=159&type=chunk) [PART II. OTHER INFORMATION](index=48&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=48&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The company is not currently involved in any material litigation, though it handles various claims in the ordinary course of business - The company is not currently a party to any material litigation[160](index=160&type=chunk) [Risk Factors](index=48&type=section&id=ITEM%201A.%20RISK%20FACTORS) This section refers the reader to the 'Risk Factors' discussed in the company's Annual Report on Form 10-K for the fiscal year ended January 31, 2019, for a detailed discussion of potential risks - The report directs investors to review the Risk Factors section of the Form 10-K for the fiscal year ended January 31, 2019[161](index=161&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=48&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECU RITIES%20AND%20USE%20OF%20PROCEEDS) There were no unregistered sales of equity securities during the period - None[162](index=162&type=chunk) [Exhibits](index=48&type=section&id=ITEM%206.%20EXHIBITS) This section lists exhibits filed with the Form 10-Q, including CEO/CFO certifications and XBRL financial statements - Exhibits filed include CEO/CFO certifications and XBRL data files[169](index=169&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended April 30, 2019 Commission File No. 001-33866 TITAN MACHINERY INC. (Exact name of registrant as specified in its charter) (State or Other Jurisdiction of Incorporation or Organization) Delaware No. 45-0357838 (IRS Employer Identification No.) 644 East Beaton Drive West Fargo, ND 58078-2648 (Addr ...

PART I [Business](index=3&type=section&id=Item%201.%20Business) Titan Machinery operates agricultural and construction equipment dealerships in the U.S. and Europe, generating revenue from equipment, parts, services, and rentals - The company operates through three reportable segments: Agriculture, Construction, and International, with a network of **74 stores in the U.S.** and **30 in Europe**[12](index=12&type=chunk)[13](index=13&type=chunk) Revenue Sources for Fiscal Year 2019 | Revenue Source | FY2019 % of Total Revenue | | :--- | :--- | | Equipment Sales | 72.1% | | Parts Sales | 16.7% | | Repair & Maintenance Services | 6.9% | | Rental & Other | 4.3% | - Titan Machinery is heavily reliant on CNH Industrial, which supplied approximately **72% of new equipment** sold across all segments in fiscal 2019[38](index=38&type=chunk) - The company's growth strategy involves increasing same-store sales and pursuing strategic acquisitions to consolidate the fragmented dealership market[34](index=34&type=chunk) [Risk Factors](index=16&type=section&id=Item%201A.%20Risk%20Factors) Key risks include heavy reliance on CNH Industrial, cyclical market demand, international operational challenges, high debt levels, and intense competition - A majority of the business depends on CNH Industrial for equipment, parts, financing, and marketing support, with adverse changes posing severe harm to Titan Machinery[75](index=75&type=chunk)[76](index=76&type=chunk)[77](index=77&type=chunk) - Sales are affected by market factors beyond the company's control, including cyclical demand in agriculture tied to net farm income and in construction tied to economic conditions and commodity prices[84](index=84&type=chunk)[85](index=85&type=chunk) - International operations, accounting for **18.4% of FY2019 revenue**, expose the company to risks like currency fluctuations, political instability, and diverse legal environments[95](index=95&type=chunk)[96](index=96&type=chunk) - The company's indebtedness, including floorplan financing and Senior Convertible Notes, could limit financial flexibility, with restrictive covenants potentially leading to debt acceleration upon breach[99](index=99&type=chunk)[101](index=101&type=chunk)[102](index=102&type=chunk) - Effective inventory management is critical, as equipment inventory represents over **50% of total assets**, with over-supply or inaccurate valuation negatively impacting margins and profitability[91](index=91&type=chunk)[93](index=93&type=chunk) [Unresolved Staff Comments](index=23&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the Securities and Exchange Commission - None[121](index=121&type=chunk) [Properties](index=23&type=section&id=Item%202.%20Properties) As of January 31, 2019, the company operates 104 equipment stores, predominantly leased, with its corporate headquarters also under lease Store Count by Segment as of January 31, 2019 | Segment | U.S. Stores | European Stores | Total Stores | | :--- | :--- | :--- | :--- | | Agriculture | 48 | 0 | 48 | | Construction | 26 | 0 | 26 | | International | 0 | 30 | 30 | | **Total** | **74** | **30** | **104** | - The company leases **120 facilities** with various expiration dates through January 2031, including its corporate headquarters in West Fargo, ND[124](index=124&type=chunk)[127](index=127&type=chunk) [Legal Proceedings](index=24&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in ordinary course legal claims, generally covered by insurance and not expected to materially impact financial results - The company is involved in ordinary course legal claims and suits, which are generally covered by insurance and are not expected to have a material impact[128](index=128&type=chunk) [Mine Safety Disclosures](index=24&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section is not applicable to the company - Not applicable[129](index=129&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=26&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Common stock trades on NASDAQ under "TITN"; no dividends paid or anticipated, with performance compared to market indices - The company's common stock is traded on the NASDAQ under the symbol **"TITN"**[136](index=136&type=chunk) - The company has not paid dividends and does not expect to in the foreseeable future, prioritizing expansion and debt service[137](index=137&type=chunk) Stock Performance Comparison (Value of $100 Investment) | Date | Titan Machinery Inc. | Russell 2000 Index | S&P 500 Retail Index | | :--- | :--- | :--- | :--- | | Jan 31, 2014 | $100.00 | $100.00 | $100.00 | | Jan 31, 2015 | $86.69 | $103.05 | $118.75 | | Jan 31, 2016 | $52.09 | $91.56 | $137.22 | | Jan 31, 2017 | $84.72 | $120.42 | $160.31 | | Jan 31, 2018 | $131.84 | $139.27 | $230.59 | | Jan 31, 2019 | $114.97 | $132.95 | $241.71 | [Selected Financial Data](index=28&type=section&id=Item%206.%20Selected%20Financial%20Data) Five-year financial summary shows FY2019 return to profitability with **$1.26 billion** revenue and **$12.2 million** net income, alongside store count changes Five-Year Selected Statement of Operations Data (in thousands, except per share data) | Metric | FY 2019 | FY 2018 | FY 2017 | FY 2016 | FY 2015 | | :--- | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $1,261,505 | $1,192,606 | $1,201,697 | $1,355,792 | $1,882,430 | | Gross Profit | $231,588 | $215,300 | $213,729 | $205,914 | $308,384 | | Income (Loss) from Operations | $27,481 | $925 | $(2,372) | $(23,110) | $723 | | Net Income (Loss) | $12,182 | $(7,049) | $(14,179) | $(37,892) | $(32,157) | | Diluted EPS | $0.55 | $(0.32) | $(0.65) | $(1.76) | $(1.51) | Five-Year Selected Balance Sheet Data (in thousands) | Metric | Jan 31, 2019 | Jan 31, 2018 | Jan 31, 2017 | Jan 31, 2016 | Jan 31, 2015 | | :--- | :--- | :--- | :--- | :--- | :--- | | Total Assets | $792,438 | $760,308 | $771,422 | $1,047,875 | $1,325,614 | | Total Liabilities | $457,127 | $438,453 | $450,243 | $709,526 | $947,255 | | Total Stockholders' Equity | $335,311 | $321,855 | $321,179 | $338,349 | $378,359 | - The company's store count ended fiscal 2019 at **104**, a net increase of **7 stores** during the year, following a net decrease of **12 stores** in fiscal 2018[146](index=146&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses FY2019 financial performance, noting a **5.8% revenue increase** to **$1.26 billion** and a return to **$12.2 million** net income, supported by cost controls and sufficient liquidity [Results of Operations](index=41&type=section&id=Results%20of%20Operations) FY2019 saw a **5.8% revenue increase** to **$1.26 billion** and a return to **$12.2 million** net income, driven by equipment sales and improved margins Consolidated Revenue by Source (FY2019 vs. FY2018) | Revenue Source | FY 2019 (in thousands) | FY 2018 (in thousands) | % Change | | :--- | :--- | :--- | :--- | | Equipment | $909,178 | $844,768 | 7.6% | | Parts | $210,796 | $203,231 | 3.7% | | Service | $86,840 | $88,794 | (2.2)% | | Rental and other | $54,691 | $55,813 | (2.0)% | | **Total Revenue** | **$1,261,505** | **$1,192,606** | **5.8%** | Segment Income (Loss) Before Income Taxes (FY2019 vs. FY2018) | Segment | FY 2019 (in thousands) | FY 2018 (in thousands) | | :--- | :--- | | Agriculture | $16,799 | $(3,678) | | Construction | $(4,400) | $(7,278) | | International | $5,160 | $2,205 | | **Total Segment Income (Loss)** | **$17,559** | **$(8,751)** | - The improvement in FY2019 results was driven by higher equipment gross profit margins, increased sales volume, operating expense savings from the Fiscal 2018 Restructuring Plan, and lower interest expense[209](index=209&type=chunk)[211](index=211&type=chunk)[219](index=219&type=chunk) - In FY2018, the company implemented a restructuring plan, closing **15 stores**, which led to **$10.5 million** in restructuring costs but resulted in decreased operating expenses compared to FY2017[168](index=168&type=chunk)[230](index=230&type=chunk) [Liquidity and Capital Resources](index=55&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity is sufficient from operations and credit facilities, with **$640.0 million** in floorplan lines and **$45.6 million** Senior Convertible Notes maturing in May 2019 - Primary liquidity sources are cash from operations and borrowings under floorplan payable and other credit facilities[253](index=253&type=chunk) - As of January 31, 2019, the company had total floorplan payable lines of credit of **$640.0 million**, including a **$400.0 million** facility with CNH Industrial Capital and a **$140.0 million** line with Wells Fargo[255](index=255&type=chunk) - The remaining **$45.6 million** principal balance of the Senior Convertible Notes matures on May 1, 2019, with sufficient liquidity expected to satisfy this obligation[258](index=258&type=chunk) Contractual Obligations as of January 31, 2019 (in thousands) | Obligation Type | Total | Less Than 1 Year | 1 to 3 Years | 3 to 5 Years | More Than 5 Years | | :--- | :--- | :--- | :--- | :--- | :--- | | Long-term debt | $44,782 | $6,211 | $11,427 | $8,070 | $19,074 | | Senior convertible notes | $46,065 | $46,065 | $— | $— | $— | | Operating lease | $158,566 | $20,117 | $36,780 | $33,260 | $68,409 | | Purchase obligations | $5,317 | $1,849 | $2,941 | $527 | $— | | **Total** | **$254,730** | **$74,242** | **$51,148** | **$41,857** | **$87,483** | [Quantitative and Qualitative Disclosures About Market Risk](index=62&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks from interest rate fluctuations, potentially impacting pre-tax earnings by **$1.2 million** for a 1% rate increase, and foreign currency exposure - The company is exposed to interest rate risk on its variable rate debt, where a **1% increase** in interest rates would decrease pre-tax earnings by approximately **$1.2 million**[291](index=291&type=chunk) - Foreign currency exchange rate risk exists due to European operations, encompassing transactional risk from foreign-denominated assets/liabilities and translational risk from converting financial statements to U.S. dollars[292](index=292&type=chunk)[293](index=293&type=chunk) [Financial Statements and Supplementary Data](index=63&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents audited consolidated financial statements for FY2019-FY2017, including balance sheets, operations, and cash flows, with FY2019 reporting **$792.4 million** total assets and **$1.26 billion** revenue Consolidated Balance Sheet Highlights (in thousands) | Account | Jan 31, 2019 | Jan 31, 2018 | | :--- | :--- | | Total Current Assets | $640,892 | $599,146 | | Total Assets | $792,438 | $760,308 | | Total Current Liabilities | $420,452 | $328,289 | | Total Liabilities | $457,127 | $438,453 | | Total Stockholders' Equity | $335,311 | $321,855 | Consolidated Statement of Operations Highlights (in thousands) | Account | FY 2019 | FY 2018 | FY 2017 | | :--- | :--- | :--- | :--- | | Total Revenue | $1,261,505 | $1,192,606 | $1,201,697 | | Gross Profit | $231,588 | $215,300 | $213,729 | | Income (Loss) from Operations | $27,481 | $925 | $(2,372) | | Net Income (Loss) | $12,182 | $(7,049) | $(14,179) | Consolidated Statement of Cash Flows Highlights (in thousands) | Account | FY 2019 | FY 2018 | FY 2017 | | :--- | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $46,605 | $95,812 | $140,997 | | Net Cash Used for Investing Activities | $(25,832) | $(24,589) | $(9,125) | | Net Cash Used for Financing Activities | $(16,727) | $(71,466) | $(167,976) | | Net Change in Cash | $3,349 | $245 | $(36,314) | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=128&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants regarding accounting and financial disclosure - None[551](index=551&type=chunk) [Controls and Procedures](index=128&type=section&id=Item%209A.%20Controls%20and%20Procedures) As of January 31, 2019, management, including the CEO and CFO, concluded that disclosure controls and internal control over financial reporting were effective - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of January 31, 2019[552](index=552&type=chunk) - Management concluded that internal control over financial reporting was effective as of January 31, 2019, based on the COSO framework[553](index=553&type=chunk) [Other Information](index=128&type=section&id=Item%209B.%20Other%20Information) The company reports no other information for this item - None[556](index=556&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=128&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the 2019 Annual Meeting of Stockholders proxy statement - Information required by this item is incorporated by reference from the registrant's 2019 Annual Meeting of Stockholders proxy statement[558](index=558&type=chunk) [Executive Compensation](index=128&type=section&id=Item%2011.%20Executive%20Compensation) Information on executive compensation is incorporated by reference from the 2019 Annual Meeting of Stockholders proxy statement - Information required by this item is incorporated by reference from the registrant's 2019 Annual Meeting of Stockholders proxy statement[559](index=559&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=128&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information on security ownership and related stockholder matters is incorporated by reference from the 2019 Annual Meeting of Stockholders proxy statement - Information required by this item is incorporated by reference from the registrant's 2019 Annual Meeting of Stockholders proxy statement[560](index=560&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=129&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on certain relationships, related transactions, and director independence is incorporated by reference from the 2019 Annual Meeting of Stockholders proxy statement - Information required by this item is incorporated by reference from the registrant's 2019 Annual Meeting of Stockholders proxy statement[561](index=561&type=chunk) [Principal Accounting Fees and Services](index=129&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information on principal accounting fees and services is incorporated by reference from the 2019 Annual Meeting of Stockholders proxy statement - Information required by this item is incorporated by reference from the registrant's 2019 Annual Meeting of Stockholders proxy statement[562](index=562&type=chunk) PART IV [Exhibits, Financial Statement Schedules](index=129&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists all financial statements, schedules, and exhibits filed as part of the Form 10-K report - This item lists all financial statements, schedules (such as Schedule II—Valuation and Qualifying Accounts), and exhibits filed with the annual report[564](index=564&type=chunk)[565](index=565&type=chunk) [Form 10-K Summary](index=135&type=section&id=Item%2016.%20Form%2010-K%20Summary) This section is not applicable - Not applicable[573](index=573&type=chunk)